I am getting myself confused trying understand these disclosures and notices. If we risk base price our home equity loans and lines of credit and a customer gets a lower rate than other customers due to his credit score, is the Credit Score Disclosure and Notice to Home Loan Applicant the only disclosure we are required to send? Or are we required to send a risk-based pricing notice as well?

Thanks!

Do you use risk based pricing notices or the exception notices, such as Model H-3 and H-4?

Yes Model H-3.

The H-3 model form with the NHLA will cover you for both 609(g) and provide you an exception from RBP notices, so long as you provide it to each consumer that "requests from the person an extension of credit that is or will be secured by one to four units of residential real property."

I should also note that if you don't provide the exception notice (H-3), you only have to provide a RBP Notice if the person "grants, extends, or otherwise provides credit to that consumer on material terms that are materially less favorable than the most favorable material terms available to a substantial proportion of consumers." So you're consumer that gets a lower rate wouldn't need a RBP (unless some other material term was worse due to info in the credit report).

See Reg V 1022.72 and 74

So, if I am understanding this, we increase a rate by 1/4% due to the credit score. That is not "materially less favorable?"

Look at 1022.72(b) for what materially less favorable means, but if you're providing the H-3 notice to everyone that applies you don't have to send a RBP Notice to anyone.

That is good to know! Thank you!

So let me ask another question. We have a husband and wife applying for a home equity line of credit. The husband has a credit score of 750 but the wife has a credit score of 850. The 750 score gives the customer in a higher rate of interest. Is there any guidance on which rate we should use?

Thanks again!

Setting rates is up to your internal policies and state laws (if applicable). What does your policy say regarding this?

I am working on getting that. Thanks for your help!